Self Build Mortgages
As the name suggests, a self-build mortgage is a mortgage loan taken out on a property which you are building yourself, so if you are taking on the exciting project of building your own home then this could be the right mortgage option for you.
The biggest difference between self-build mortgages and standard residential mortgages is that the funds are released to you at various stages of the build rather than as a single lump sum. The reason the Mortgage lender does this, is to reduce any risk and ensure that the money is spent as planned so you don’t run out when you are only half way through the project.
Exactly when funds are released will depend on the lender but, normally, you’ll get the first tranche when you buy the land, more when the foundations are laid and a further payment when the property is built up to eaves level.
The final payments will be made when the roof is watertight and then when the interior walls are plastered, and the last instalment is paid on completion.
Self-build mortgages are offered by specialist lenders, as well as some mainstream banks and building societies.
Various types of self-build mortgages are available
With most self-build mortgages, the money is paid once each stage has been completed and a valuer has visited the site.
However, there are some self-build mortgages release the money required for each stage of the build at the beginning rather than the end of the stage. This is particularly useful if you don’t have the cash up front to pay your builders or to buy materials.
Save on stamp duty payments
One of the advantages of building your own home using a self-build mortgage is that you could save yourself from having to pay the full amount of stamp duty. This is because you don’t need to pay stamp duty on the cost of the building work, or the value of the property once the work has been completed. You only have to pay duty on the cost of the plot of land itself if this cost exceeds £125,000.
The potential financial gains from building your own home are another advantage, normally your finished property is worth much more than it cost them to construct.
Interest rates on self-build mortgages tend to be higher than on standard mortgages, so it’s important that you do your research well before you decide which mortgage is the one for you.
We offer a range of specialist mortgages, including self-build mortgages. You can sit down and speak to one of our qualified mortgage advisers, explain your plans and we’ll find a mortgage that we think is right for your circumstances.
Often with self-build mortgage applications, there is more paperwork to fill out as you’ll have to submit your plans e.g. planning permission, building plans, financial forecasts for the costs you’re likely to incur etc. Our mortgage advisors will take care of the whole mortgage application, from beginning to end, including dealing with any paperwork required, leaving you to concentrate on the exciting bits; the actual build!